Dr Theo Acheampong, a UK-based international petroleum economist has called on the current and successive governments to find innovative ways of plugging revenue loopholes.
He said Ghana’s failure to effectively generate enough revenue domestically has been the cause of the country’s over reliance on the international market to raise funds.
“I must say that since our country got exposed to the capital markets, we have become very lazy… Putting plasters on our [economic] wounds, but allowing them to fester unhealthily,” Acheampong said on Asaase 99.5 Accra’s Townhall Talk show.
“We treat the symptoms of our economic issues when clearly our political style is what is handicapping our development. This is a wider discussion that as a nation, we must have.”
He added: “I must stress that… our economy is a symptom of a bigger problem; a problem of a hard styled adversarial political structure that gives no room for bipartisanship.”
Cost of government domestic borrowing sees marginal dip
The current direction of headline inflation and the monetary policy rate is impacting yields across the issuance spectrum, as interest rates on government bills have seen a slight decline, with investors expect a further fall.
According to data market updates published by the Bank of Ghana, since 30 May 2021, interest rate on the 91-day bill eased from 12.7% to 12.6%, while the 182-day bill reduced from 13.5% to 13.4%. The one-year note also fell from 16.4% to 16.3%.
This means government interest payment on domestic debt will see a marginal reduction.
With the current decline in inflation to 7.5% in May, and the cut in the policy rate to 13.5%, senior economist with Databank, Courage Kingsley Martey, said yields on government securities are expected to be further subdued.
“We believe there’s a sizable scope for spreads to tighten as yields fall across the front to the middle segment of the curve with investors bidding to take a position in medium-term securities. The longer end of the curve may not witness a significant drop as we perceive investors aversion to duration risk, given the sharp year-to-date decline in yields at the back end of the curve,” he said.
The finance ministry last month announced that government expects to borrow GHC2.09 billion in fresh issuance from the domestic market to meet its financing requirements.
In total, the treasury expects to issue a gross amount of GHC21.96 billion from June to August 2021, of which GHC19.86 billion is meant to roll over maturing securities.
Fred Dzakpata
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